Donating a Car

Donating to Qualified Charities

If you want your vehicle donation to be tax-deductible, you must donate your vehicle to what the Internal Revenue Service (IRS) refers to as a "qualified charity." A qualified charity is one that is able to receive tax-deductible donations.

In addition to visiting the IRS Web site or calling them at (800) 829-3676, you can find qualified charities when you:

• Read the electronic version of Publication 78.

• Search the online version of Publication 78.

• Refer to Eligible Donees Generally Not Listed in Publication 78.

In Maryland, you must also make sure the charity is licensed as a Maryland wholesale dealer, so it's wise to check out which charities are regulated by the MVA to accept donated vehicles.

Research Your Charity

It's also wise to research your charity of choice beyond its tax-deduction benefits. Find additional information from:

• The National Association of State Charity Officials (NASCO).

• The Charitable Organizations Division of the Maryland Office of the Secretary of State.

• The Maryland Solicitation Act.

Tax-Deductible Donations in a Nutshell

Once you've made sure the charity you've chosen is a qualified charity―one that can accept tax-deductible donations―it's time to start on the real work.

IRS Publication 4303, A Donor's Guide to Car Donation, guides you through the process of donating a vehicle; however, below DMV.ORG has outlined the important factors of finding your car's value, recognizing your limitations, and organizing your paperwork.

Find Your Vehicle's Fair Market Value

The IRS allows you to deduct only as much as your vehicle's fair market value.

Simply put, the fair market value is the vehicle's worth with factors such as mileage, wear and tear, and functionality taken into consideration. Fair market value is not the same as the Kelley Blue Book value.

Publication 561, Determining the Value of Donated Property, provides information to help you determine your vehicle's fair market value.

Limitations on Vehicle Tax Deductions

Vehicle donations can be pretty hefty tax deductions, so the IRS imposes some limitations to keep things in order. Publication 526, Charitable Contributions, outlines those limitations for you.

The Paperwork

The IRS provides information about all necessary paperwork in Publication 4303.

A few common documents for vehicle tax donations include:

• Form 8283 Noncash Charitable Contributions.

• A qualified appraiser's written appraisal of your vehicle.

• The charity's written acknowledgment of the donation.

Notify the Maryland Motor Vehicle Administration

When you donate a vehicle to charity, you'll follow basically the same MVA registration and titling procedures as if you were selling the vehicle. Points to remember include:

• You must take care of any liens on the vehicle before you transfer ownership and notify the MVA.

• Assign the title to the charity, with your name as the "seller" and the charity's name as the "buyer."

• Remember to record the vehicle's mileage on the title.

• Unless you plan to transfer your license plates, return them to your local MVA office or title service agent for a possible refund.

• Cancel the vehicle's insurance once you transfer or return your plates.

For more information, visit Maryland's Donating a Vehicle to Charity.